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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: GST who wrote (58147)	4/13/2006 9:57:44 AM
From: russwinter	Read Replies (2) \| Respond to of 110194

That might be debatable, but don't necessarily disagree. Showing my "cultural bias", I grew up in Kansas (close to the show me state, Missouri)though, where "talk is cheap".

To: GST who wrote (58147)	4/13/2006 11:51:25 AM
From: mishedlo	Read Replies (1) \| Respond to of 110194

Marc Faber shatters prevailing market myths [He even knows what inflation is and how to measure it - Mish] Conservative Swiss or a compulsive contrarian, he is the ponytail prince of pessimism and the man who says things nobody wants to hear. An exclusive tete-a-tete with Marc Faber, the man they call Dr Doom. news.moneycontrol.com Q: How important is it to understand the role of the Federal Reserve to understand the world economy? A: I think it is very important to understand the fact that we have a central banking system where the central banks can indicate, theoretically drop dollar bills from Helicopters. You wont be able to do that because all American helicopters are in Iraq. But they can print money, that is a fact and they can flood the system with liquidity. Then you have to find a measurement of inflation. We measure inflation by rise in money supply. It would be wrong to think that the inflation is just consumer price increases. Inflation is a loss of purchasing power of your currency, dollar or Rupee. It can manifest itself by rise in consumer price but it can also manifest itself by a loss of purchasing power of money against real estate, or against stocks and real estate. Q: What is the public enemy No 1 in your book, would it be inflation, or deflation? A: In my book public enemy No 1 are the central banks. I think the world will be much better off under a gold standard. Other than that, I think the asset inflation is much more dangerous than consumer price inflation because asset inflation is driven by a huge credit bubble. Then asset prices become very expensive and when asset prices go down it leads to recession. So the Central Banks will support asset prices and see to it that they keep on going up. So they will inflate more and more and eventually you will come to an economic collapse. Q: Can the dollar fall alone, or would it be the dominos effect, which would take down other markets? A: In my opinion, the dollar will depreciate mostly against the gold. In the long run, what you will see is the standard of living in America will decline very significantly compared to the standard of living in Asia. And the stock market capitalization of US, which is now 52% of the world's stock market capitalization, which will decline to somewhere between 20% and 30% and the Asian stock market capitalization will rise to between 20% and 30%, possibly 50% of the world.